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Athabasca Oil gets its money – now what?

Also, why natural gas bulls should be excited about the upcoming winter (and why the rest of us probably shouldn't)

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Sep 2, 2014

by Max Fawcett

Well, so much for that. After receiving the much anticipated proceeds of a put option from PetroChina – $600 million in cash, and the balance of the $1.18 billion in the form of fully-backed promissory notes – Athabasca Oil’s shareholders expected to see a nice bump in the value of their shares. And while they rallied on the news Friday to the $8 level, they’ve given all of those gains back today. In other words, the uncertainty over those proceeds that some felt was weighing down Athabasca’s shares may not have actually been the reason for their relatively inexpensive valuation. Now, it seems, shareholders will have to wait for another transaction, this time a joint venture on Athabasca’s Duvernay acreage. At this point, it’s fair to wonder whether they’ll be disappointed by the results there as well.

Meanwhile, a lower than forecasted natural gas storage injection figure in August, one that leaves overall storage below the five-year average, has natural gas bulls salivating at the prospect of another cold winter. And that’s precisely what they’re going to get, according to the 2015 Farmers’ Almanac. “A large zone of very cold temperatures will be found from east of the Continental Divide east to the Appalachians,” a synopsis of this year’s forecast says. “The most frigid temperatures will be found from the Northern Plains into the Great Lakes. The coldest outbreak of the season will come during the final week of January into the beginning of February, when frigid arctic air drops temperatures across the Northern Plains to perhaps 40 below zero. No region will see prolonged spells of above-normal temperatures; only near the West and East Coasts will temperatures average close to normal.” For those looking to make a more specific trade, the Farmers’ Almanac has “red-flagged” the first 10 days of January, the first week of February and the middle of March as periods of particularly cold and unpleasant weather on the U.S. east coast, where much of the population – and therefore demand for natural gas – resides.